Liberian authorities say their armed forces have gained the upper hand in the fight to repel a rebel attack on the capital, Monrovia. But rebels say they control large areas and are still poised for attack.

When President Charles Taylor declared a state of emergency Friday, his speech to the nation left many Monrovians fearing an imminent attack and a return to the bloody civil war that ripped the country apart from 1989-96.

But Liberia Information Minister Reginald Goodridge said people are calmly going about their daily business in the capital. "Today is a holiday, it is armed forces day, and people are moving about very calmly," he said. "Of course, many people are concerned about the insurgents. They only held an area called Klay Junction for a few hours, and government forces were able to push them back to where they came from, which is a place near the Bupalo area, where fighting is going on at the moment."

The rebel forces, Liberians United for Reconciliation and Democracy, said last week they had captured the town of Klay. The battle was the closest to Monrovia since fighting began in mid 2000, and it prompted President Taylor to impose the state of emergency.

But the government says that since it has regained control of Klay the rebels will not attempt an attack on the capital.

Aid agencies say thousands of Liberian refugees have fled to camps in and around Monrovia, following the renewed clashes for control of Klay, which was already a refuge for thousands of civilians displaced by earlier fighting in the north.

Mr. Goodridge accuses Guinea of backing the rebels. He says support from Liberia's northern neighbor will be the rebels' downfall, now that they have moved south. "The area of the country that is now under attack is far away from the Guinean border, and to the extent that they may not be able to have a constant supply it will be only a matter of time until they run out of the ammunition that they have," he said. "We have enveloped them in an area, so it is a no-win situation for them. For them to even think about attacking Monrovia would be suicidal mission. We have pinned them down in Bupalo, we have managed to contain them there, and we do not expect them to advance any further from that area."

But the strategic town of Bupalo, 85 kilometers from Monrovia, has previously been used as a forward base by the rebels.

A rebel spokesman on Sunday denied that the government had an advantage, and said the rebels were poised to move ahead. The rebels, who threatened last week to attack Monrovia if President Taylor did not resign, also say they control much of northwest Liberia.

But Liberian Defense Minister Daniel Chea denies that the rebels control large areas, and said on Sunday that his soldiers were also battling rebels in the northern town of Kolahun.

Forces loyal to President Taylor have been fighting rebel factions in the north since 1999. Mr. Taylor was a former rebel leader from 1989 to 1997. He was elected president in 1997 at the end of a seven-year civil war that devastated the West African nation.